It’s the start of the fourth quarter, coach: Do you know where your customers are?
To the old Ben Franklin adage about the only things certain in life being death and taxes, we can now add a third: Really bad economic predictions.
For the past 36 months we have been subjected to an endless array of forecasts, prognostications and outright guesses on what was going to happen to business conditions going forward.
And they’ve all pretty much been wrong.
It’s like the old Louis Prima song lyrics:
“First you say you do and then you don’t.
And then you say you will and then you won’t.”
The fits and starts of the Not-So-Great-Recovery from the Great Recession are making us all a little crazy. We went through a pretty decent first quarter of 2010. Stores were somewhat optimistic and started kicking up their ordering patterns a few notches. It didn’t hurt that most companies were going up against some of the weakest numbers this side of the Mets’ team batting average.
We started to see corporate profits returning and subsequently Wall Street began to get more bullish. It took a while for most people to figure out that those better bottom lines were a reflection of lower costs, not higher sales. Wall Street loves a good profit story.
Even retail traffic began to come back ever so slightly. Consumers, perhaps finally comfortable with the idea that if they still had a job they were probably going to keep it, started to poke their heads out of the holes they had dug and took out their credit cards—at least some of them—again.
Then the whole thing came crashing down sometime in late April or May for many companies, perhaps a little bit later for others.
By the time the home business rolled into the summer series of shows and markets, it was starting to look a little bleak out there. People were starting to say it was the Great Recession, part deux.
Now we come into the fourth quarter of the year, the make-or-break-time for most companies in the home business. This is when you separate the men from the ... well, from the other guys, gender not specific.
So, here’s what we know:
• The economy is going to stay tough. Companies are no longer going up against the lollipop numbers of the first half of 2009 and they will need to do some serious business to stay in the black.
• Retail traffic remains OK. Virtually every retailer reporting their numbers this summer said the volume of people in their stores was up but the average transaction was down. So people are continuing to go to stores again, they just aren’t walking out with as many shopping bags as they used to.
• Low prices by themselves are not enough. The Walmart results and the rather frank admissions from their top people suggest that rollbacks, price cuts and promotions aren’t doing the trick like they used to. It takes more to get the customer to pull the purchase trigger.
• Prices are going to hang in there through the end of the year. Most of the ordering for holiday has squeezed through the system before the really big cost increases have hit the marketplace. We’ll see some price hikes—especially on new programs—but it won’t be as dramatic as some (including yours truly) originally thought.
• The good stuff will be good. Consumers have been very clear about one thing: They will buy something special when the price is right and they want it bad enough.
You can’t get into a business conversation these days without the words “double dip” being spoken. But in baseball, when a fielder just barely catches a ball with the better part of it hanging out of his glove, it’s called a snow cone.
It could very well be that kind of selling season: Just barely catching it. — Warren Shoulberg
